Shillong, Oct 19 (IANS): Meghalaya has decided to mine its coal block in Odisha to run a new thermal power project following coal ministry's threats of de-allocation.

The state government has decided to enter into a joint venture with independent power producers to develop a 1,320 MW thermal power project from the coal sourced from the Mandakini-B coal block in Odisha, Meghalaya Power Minister Abu Taher Mondal told IANS Friday night.

He said the cabinet had given its nod to the project that will have two power plants.

The go-ahead comes soon after the coal ministry issued Meghalaya a show cause notice, threatening to de-allocate the coal block allocated five years ago.

Mondal said Meghalaya Mineral Development Corporation (MMDC) would mine the coal block and the power purchase agreement would be signed in the name of Meghalaya Energy Corporation Ltd.

"We will see that land for the two power plants is within a radius of 100 km from the mine to reduce transportation cost," Mondal said.

Meghalaya, once a power-surplus state, is now power-deficient.

The coal ministry, in July 2007, had allotted the Mandakini-B coal block to Assam, Meghalaya, Tamil Nadu and Odisha. But development of the coal block was delayed.

The coal block in Odisha's Angul district with a reserve of 1,200 million tonnes was allotted to Meghalaya Mineral Development Corporation, Assam Mineral Development Corporation, Tamil Nadu Electricity Board(TNEB) and Orissa Mining Corporation.

The coal ministry in May had issued notices to the four corporations for the delay.